Refinancing?!?!?!

[crunchy_mommy]

How the heck does it work???

We called our lender a while back and they said we can't refinance through them (it was a first-time homebuyer's program). I do like the safety of having a loan through them (they offer programs like reduced mortgage pymts during the winter so people can pay for heat so they are clearly flexible and want to keep people in their homes!)

Our house is worth about 2/3 of what we paid for it. So selling it isn't an option even if we wanted to, though we would definitely consider relocating if it were an option!!

We bought about 4 years ago I think. We had a 'good' (at the time) interest rate but just 1% lower rate would save us $50K over the course of the loan and $200/mo.

We are not in default and we do have savings, but my DH was laid off and has been unemployed for months and has no good prospects yet. We spend so little money so that we can have that savings and not go into debt, you know?? Half the stuff we own came from curbside on trash day. It would be nice to have a bit more breathing room and a lower interest rate would REALLY help, but it's not like we *can't* make our payments so I don't know whether we'd qualify for the hardship programs. We also have student loans but no other debt.

I guess I just want to see if there's any way to take advantage of all the programs out there that claim to help in this horrible economy but I can't seem to find any solid info and don't want to get ourselves into an even worse situation. And we are nervous about assessments because we... uhhh... we may have done work without a permit (don't ask...) and the house isn't even finished. But we just want to get ahead a bit and I don't see how that's possible with our state's super-high unemployment rate & super-low housing prices...

[squidink]

I'm not sure about any assistance programs, but I refinanced my home through a small bank last year.  Our new interest rate is almost 2 percentage points lower.  I would start by talking to local banks and credit unions.  You're more likely to get treated well by a small company than by a national bank.  I also recommend looking at Clark Howard's website for advice about refinancing.  http://www.clarkhoward.com/categories/homes-real-estate/loan-modifications-refinancing/

It doesn't cost anything to talk to loan officers about refinancing, so you can shop around to different banks for their rates.  To nail down a rate you have to let them run a credit report, so you don't want to do that at lots of different banks.  Running lots of credit reports in a short time can ding your credit score.  I'm not an expert, but I got through the process last year.  Take your time reading any contracts and don't sign anything you don't understand 100%.  I hope this helps.

[nd_deadhead]

I'm no expert, but I can see where a bank would be unwilling to take a risk on a new loan with your DH unemployed and the house worth less (less than the loan amount, I'm assuming?)

Remember that you pay closing costs to refinance - a bank fee of usually 1% of the loan amount, plus apprasial and other misc costs. For you to save that much per month with a 1% drop in interest rate, you must be looking at a mortgage around $300K - you're looking at $4000 or more in closing costs. If you rolled that into the mortgage (which you can only do if the house appraises for more than the loan amount), it would cost you an additional $20/month in payment, and almost $3000 in interest over the life of the loan. Alternatively, you have to come up with closing costs up front, which pulls those finds out of savings.

It sounds to me like you're better off living with the mortgage you have - especially if the fact that it's unfinished means that it won't appraise well.

[ellairiesmom]

In our extensive experience (2 years of trying to work with Chase), you cannot refinance without income.  Our home appraises for more than we owe but they just won't allow a refinance to occur without someone getting an "official" paycheck.  We tried really hard.

As for the "programs" out there...we have yet to find something that was legit & that we could do based on our situation.  But I agree that smaller banks are the way to go. 

[mar123]

My dh has been out of work for almost a year and I have done extensive research on all of these wonderful programs that are supposed to exist. Keep in mind I have a full time good paying job- with 15 years employment history in the same field. Yet, without his income we can't get any help. Even the "making Home Affordable for the unemployed" program wouldn't help us. Why? because they don't count his unemployment as "income": and without him working we don't make enough to qualify. It is ludicrous. There was a really great HUD program I found which would loan money at 0% interest to continue paying their mortgages for up to 2 years- but it is not set up yet. I first found the website about it 6 months ago- you click to get information and it tells you it is not set up- Yet, the program has been fully funded by the gov't. So WTH??

And we don't have an "underwater house", nor did we buy an expensive home. Our issue is insurance- I live in New Orleans. And even though we had little damage from Katrina, our insurance went from 1,400 a year to 4,500 a year in one year. It has gone up once more since then. Our excrow for ins and taxes is $700 a month. It's crazy. That will be why we lose our home if we do- not because of the payment.

[crunchy_mommy]

Wow well I was hoping someone would have a magical answer for me but at least I know I'm not crazy when I feel like these programs don't really exist!!! I'm sorry for those of you who are in similar situations!!

We do have income (I work from home, same company I used to work for in an office so it IS a 'real' paycheck) so I don't know if that would help, especially since I'm only part-time now... We should have excellent credit scores too.

We bought our house for ~$230K (which is actually about as cheap as you can get for this area) and now it's worth less than $150K... although we have done some improvements so that might not be 100% accurate but I'm sure we're still upside-down. I can't believe how little houses here are worth now (it seems like 50% of the homes around here are for sale and none are selling) and now the town decided to raise the property tax rate since the houses are appraising for so much less!!!!!!!! It's just nuts. If only I had a crystal ball several years back... I really thought we were buying at an all-time low, who knew prices would sink so much further??

Oh well. Still holding out hope that someone will chime in with some wonderful program that's up & running & would actually HELP us... Who even benefits from these supposed gov't programs??? It all makes no sense.

[tinuviel_k]

You mentioned that your house dropped in value from what you paid for it five years ago. If you owe more on your mortgage than your house is worth I don't think you will be able to refinance. Most banks do not want to give a loan for property that is worth less than the amount still owed.